Firm to appeal Jindal’s contract cancelation

The Jindal administration alleged misconduct as it abruptly canceled a $185 million-plus Medicaid claims processing contract with a Maryland-based firm, according to a letter released Friday.

A letter notifying CNSI of its firing cites a Louisiana law that states: “if the person awarded the contract has acted fraudulently or in bad faith, the contract shall be declared null and void.”

The March 21 letter signed by Sandra G. Gillen, director of state purchasing, provides no specific information on the nature of the misconduct the state is alleging.

Sonny Cranch, the local spokesman for Client Network Services Inc., challenged the allegation. He said CNSI would use appeal rights granted through state administrative procedures as well as the courts to overturn the state’s decision.

State health Secretary Bruce Greenstein was a CNSI vice president in 1995 and 1996. The contract is for operations under Greenstein’s agency, the Department of Health and Hospitals.

Greenstein’s office referred all questions on the matter to the Division of Administration.

Commissioner of Administration Kristy Nichols announced Thursday that the Jindal administration was canceling the CNSI contract effective immediately, after news broke that a federal grand jury was investigating the contract award.

The state Attorney General’s Office has also been looking into the contract award, Assistant Attorney General David Caldwell said Friday. Caldwell is head of the Attorney General’s Public Corruption and Special Prosecutions Unit.

On Thursday, Nichols said the CNSI action was taken “based on consultation with the Attorney General’s Office.”

No one at CNSI headquarters responded to a request for interview. However, Cranch said the contract cancelation caught the firm by surprise.

“We have received no indication why it happened,” Cranch said. “We have no clue. We have been working on this project for over a year now.” He said the firm has about 100 employees in Baton Rouge.

The company found out about its firing from a news account, Cranch said. It later got a letter from the Division of Administration, he said.

Cranch said neither the federal grand jury nor the Attorney General’s Office has contacted CNSI officials.

A public records request filed by The Advocate on the state Division of Administration produced a copy of a subpoena that confirmed a federal grand jury probe was under way. The contract cancelation came after the development hit the news.

Caldwell said the Attorney General’s Office “has had a quiet but active inquiry into this matter for some time now.”

He said recent attempts to amend the contract to increase its cost “as well as the need for unfettered access to current state Department of Health and Hospitals and Division of Administration employees prompted our office to inform the Division of Administration of our concerns” about the contract award.

Caldwell said he could not discuss the nature of those concerns.

CNSI was awarded the contract in 2011 amid allegations it was “low balling” the costs and could not perform the required work for the money. Greenstein’s prior connection with the firm also raised questions of a potential conflict of interest.

The state gave CNSI the award, although the firm ranked third among vendors in a technical review of proposals.

The contract has been amended once to add about $9 million to its bottom line. A recent attempt by the state Department of Health and Hospitals to expand it by $40 million got shot down by Nichols. She said the price tag on the amendment and the fact that it was outside the scope of work of the original pact made her reject the amendment in favor of a new request for proposals.

Nichols said the rejection of the $40 million addition came before the Attorney General’s Office warned her to beware of attempts to alter the 10-year contract to give the firm more money.

Greenstein has said he stayed out of the award process because of his prior employment with the firm. But documents obtain under a legislative subpoena showed that he advocated for a change in the solicitation for proposals that allowed CNSI to compete.

Caldwell said the DOA has promised its “full cooperation” with the Attorney General’s Office investigation.

Comments

1) Comment by RODEO CLOWN - 24/03/2013

SuperSwampRat: My comment concerning this issue is since Jindal has and continues to refuse to accept medicaid funding from the government, why would the Jindal's administration sign a multimillion, multiyear contract for processing claims? If the state does not accept medicaid funding from the feds, the feds will move in and process the claims. Louisiana will not have any medicaid claims to process. So where is the need for a contract for processing claims when the feds will be doing the job. You are correct. Louisiana will lose 100% of federal funding for medicaid—that much is true. The federal government will essentially take over medicaid from the state. The subject of medicaid being or not being part of the Affordable Care Act is tangential to the issue. My contention is medicaid and medicare are part of the Affordable Care Act. Until research demonstrates otherwise, I'll agree to disagree with your contention. However, I'd like to offer the following quote on the subject. “Gov. Bobby Jindal said Thursday he won't reconsider his refusal to expand Louisiana's Medicaid coverage under the federal health care law, even though a half dozen other Republican governors have agreed to participate.' Jindal said he won't include federal funding for a Medicaid expansion in his state budget proposal for the 2013-14 fiscal year, which will be released to lawmakers Feb. 22”.(RF: INDEPENDENT, MELINDA DESLATTE, 2/15/13)

2) Comment by zealer99 - 23/03/2013

This is a tip for politicians, campaign contributors, and lower level functionaries who deal in political favors, bribery, and corruption. When somebody does a favor for somebody, whether it is for fun or profit, they are only successful if they do it right and there are no blow backs, repercussions, or investigations. When a political appointee tries to do a favor for somebody and leaves a trail or is otherwise incompetent and it blows up in their face, they have done a lot of damage and maybe even ruined careers. To successfully conduct an operation such as this one, you really need two people in on the con, you need a high level trickster and a low level follower.

3) Comment by IH8Mud - 23/03/2013

@SwampRat, this is a mess but one that could have been avoided. If the agencies and Gov's office had acted properly from the start and not tried to work around the system, then we wouldn't be faced with this mess or at least it wouldn't be so bad. If Jindal hadn't been so eager to try to sell state government to the lowest bidder (and somehow still manage to spend 2-3 times as much in the process), we wouldn't be as much in this mess as we are. The concept of privatization can be good but the way that the administration has gone about it has been completely wrong. They have completely put us into the mess that we are in and they seem to refuse to take responsibility for it.

4) Comment by brguy - 23/03/2013

Taxpayers of this state will be picking up the tab to clean up the mess created by this Jindal administration, in legal fees and other costs, long after he's ridden off into the sunset.

5) Comment by Ben Yay - 23/03/2013

The first sentence of the article, "The Jindal administration alleged misconduct..." (on the part of the contractor) is a riot to anyone who knows the backstory. The Jindal administration itself is the one who was grossly involved in misconduct. Greenstein, at Jindal's direction, rigged the game to award the contract to Greenstein's prior firm. Jindal hoodwinked the legislature, let's see how he makes out trying this ***** with the FBI.

6) Comment by SuperSwampRat - 23/03/2013

@ Rodeo Clown Medicaid and so called "Obamacare" are two different things. Health care reform is meant to protect and assist those who cannot qualify for Medicaid. Also, it seems no one understands the implications of this irrational act by the scared bunny Jindal. First, millions of dollars and thousands of man hours have already been poured into overhauling LA's out-of-date MMIS system--two years worth of work. Dozens of local people have been hired and have worked very hard to begin fixing many things that are broken with Medicaid. What that means is less waste, fraud and abuse and saved taxpayer dollars. Scrapping this project also threatens LA's matching fedral funds, which could have disastrous implications for people who receive services through Medicaid. So those rubbing their hands together in glee that Jindal was caught being stupid and corrupt again should consider what's really at stake here. LA cannot afford to waste money and take a giant step backwards in bringing its systems into federal compliance. This is an epic mess.

7) Comment by RODEO CLOWN - 23/03/2013

QUESTION? If Jindal is not accepting medicaid via Obama care, then why would Louisiana need a 10 year contract with any company for processing medicaid claims? If Louisiana doesn't accept Obama care the feds will create their own system and process the claims for the state. From the billing standpoint Louisiana would be completely out of the “loop”. Then why sign a contract for processing medicaid claims when the claims will not be processed by the state but by the federal government?

8) Comment by PLac - 23/03/2013

Looks like CNSI may not yet realize the evidence?

9) Comment by for real - 23/03/2013

The Legislature needs to stop any Privatization and land sales plans Jindal has in the works. State can not afford the legal fees that go along with his illegal plans. They need to pass a law from Governor selling the Governor’s Mansion and State Police Helicopter, which will not be worth too much after all the hours he put on it traveling out of State to enlist campaign funds, after 2015 he won’t need them anyway.

10) Comment by qwerty - 23/03/2013

I hope the fed grand jury still investigates this issue. I do not know how it works in the real world...but sometimes when my kids come clean...i let 'em slide...I wonder if Uncle Bobby's administration will get to slide too....I wonder if they are looking at the Megellan contracts too...

11) Comment by dday198 - 23/03/2013

perp walks a coming

12) Comment by Crawdaddy - 23/03/2013

"The company found out about its firing from a news account, Cranch said." Welcome to JindalWorld. Mr. Cranch you have just found out what happens when you make Jindal look bad -- he fires you, or in this case, your whole company. Whether there is a smoking gun or not, this is a losing proposition for Louisiana. Probably a number of lawsuits coming out of this one. The irony is this contract involves processing Medicaid claims and also monitoring for potential fraud.

13) Comment by phil - 22/03/2013

Who is surprised about this? It seems like a little thinking ahead and some review of this situation from the very beginning of this project by some politicians and government agencies could have saved LA taxpayers a lot of grief and a lot of tax money that might be spent on a lawsuit. Here we go again.

14) Comment by GardenVariety - 22/03/2013

Oh, this IS getting good! House of cards, ya'll, house of cards....

15) Comment by jeffsadow - 22/03/2013

They had better be right about this. If there isn't anything to this, i.e. the grand jury doesn't indict, the company can come back get the state for breach of contract.

16) Comment by beabea - 22/03/2013

If the misconduct was on the part of the contractor rather than on the part of the state government officials involved with awarding it, why was the contract only cancelled after the Federal grand jury investigation hit the news? Like everything else about this story, this too does not pass the smell test.